Correlation Between Proto Labs and NV Bekaert

Can any of the company-specific risk be diversified away by investing in both Proto Labs and NV Bekaert at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Proto Labs and NV Bekaert into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Proto Labs and NV Bekaert SA, you can compare the effects of market volatilities on Proto Labs and NV Bekaert and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Proto Labs with a short position of NV Bekaert. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proto Labs and NV Bekaert.

Diversification Opportunities for Proto Labs and NV Bekaert

-0.6

Correlation Coefficient

Proto Labs  NV Bekaert

Excellent diversification

The 3 months correlation between Proto and BEKAY is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Proto Labs and NV Bekaert SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NV Bekaert SA and Proto Labs is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Proto Labs are associated (or correlated) with NV Bekaert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NV Bekaert SA has no effect on the direction of Proto Labs i.e., Proto Labs and NV Bekaert go up and down completely randomly.

Pair Corralation between Proto Labs and NV Bekaert

Given the investment horizon of 90 days Proto Labs is expected to generate 2.74 times more return on investment than NV Bekaert. However, Proto Labs is 2.74 times more volatile than NV Bekaert SA. It trades about 0.11 of its potential returns per unit of risk. NV Bekaert SA is currently generating about -0.17 per unit of risk. If you would invest  3,009  in Proto Labs on September 19, 2024 and sell it today you would earn a total of  1,115  from holding Proto Labs or generate 37.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Proto Labs  vs.  NV Bekaert SA

Proto Labs

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Proto Labs are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Proto Labs sustained solid returns over the last few months and may actually be approaching a breakup point.

NV Bekaert SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NV Bekaert SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Proto Labs and NV Bekaert

The main advantage of trading using opposite Proto Labs and NV Bekaert positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proto Labs position performs unexpectedly, NV Bekaert can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in NV Bekaert will offset losses from the drop in NV Bekaert's long position.

The idea behind Proto Labs and NV Bekaert SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.